UAE: Dh1.09 Tax For 'High' Sugar Drinks Exempted Products Revealed

The UAE has announced amendments to the sugar excise tax policy introduced earlier this year on certain products, while clarifying the tax rates or amounts imposed on them, and the method for calculating the selective price.

The Cabinet Decision No. (197) of 2025 implements the 'tiered volumetric model' on sweetened beverages.

Products covered under the new model include sweetened beverages, including soft drinks and drinks containing added sugar or sweeteners.

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Here are examples of exempted products under the tiered volumetric model:

• Energy drinks (remain subject to a 100 per cent excise tax based on the Excise price)

• Beverages containing 75 per cent or more of milk or milk substitutes

• Baby formula and infant foods

• Beverages for specific dietary or medical needs

• Beverages prepared for non-commercial consumption or served in open containers in restaurants for direct consumption

Meanwhile, beverages made entirely of 100 per cent natural juices (such as orange, apple, or pineapple juice) are not classified as sweetened beverages, even if their natural sugar content exceeds 5g/100 ml, provided that no sugar or sweeteners are added.

The new tax will be calculated based on the total sugar content (natural, added, and other sweeteners). In the absence of a laboratory report, beverages are automatically classified under the 'High Sugar' category until a laboratory report is provided.

Tax calculation based on sugar content per 100 ml:

Low Sugar: Less than 5g - Dh0/liter

Medium Sugar: 5g to less than 8g - Dh0.79/liter

High Sugar: 8g or more - Dh1.09/liter

Artificial Sweeteners (no sugar): Dh0/liter

Companies must act fast

Anurag Chaturvedi, CEO of Andersen in the UAE, described the newly announced Cabinet Decision No. (197) of 2025 as“a watershed moment for the excise tax landscape”, noting that the shift to a tiered volumetric model transforms sweetened beverage taxation into a far more data-driven compliance obligation.

“This is no longer about broad categorisation - it is about evidence,” he explained.“Businesses must now demonstrate sugar content through accredited lab testing, plan their transitional provisions carefully, and reassess their entire product portfolio. Without the right documentation, beverages will default into the highest tax bracket. The compliance risk is immediate and measurable.”

He emphasised that with the amendments taking effect on January 1, 2026, companies have limited time to build readiness.“Impact assessments can no longer sit on the back burner. Manufacturers and importers need to model excise exposure, revisit pricing strategies, and ensure their ERP systems can support the new reporting structure. Proactiveness is not optional - it is the new compliance currency.”

Anurag added that the reform signals a new regulatory tone.“The UAE is drawing a clear line: excise compliance is a technical discipline. Lab reports, audit trails, classification matrices - these are now central to operational decision-making, not supporting paperwork.”

He concluded with a sharp reminder:“This decision doesn't just reshape the excise regime - it reshapes how the industry must operate. The winners will be those who move now, invest in precision, and treat compliance as strategy, not obligation. 2026 will reward preparedness, not catch-up.”

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